3812 Federal Register / Vol. 63, No. 17 /Tuesday, January 27, 1998 /Rules and Regulations

small entities. Based on the evaluation,

we certify that this action will not have

a significant economic impact on a

substantial number of small entities.

Accordingly, the preparation of a

Regulatory Flexibility Analysis is

unnecessary.

Paperwork Reduction Act

The Office of Management and Budget

(OMB) had approved the information

collection requirements associated with

23 CFR part 1260 (OMB Clearance No.

2125–0027). By rescinding all of part

1260, the information collection

requirement, as that term is defined by

OMB in 5 CFR part 1320, remains at

zero.

National Environmental Policy Act

The agencies have analyzed this

action for the purpose of compliance

with the National Environmental Policy

Act and have determined that it will not

have a significant effect on the human

environment.

Executive Order 12612 (Federalism)

This action has been analyzed in

accordance with the principles and

criteria contained in Executive Order

12612. There are no federalism

implications pursuant to Executive

Order 12612 since regulatory obligations

are being rescinded because they are no

longer authorized under current law.

Under these circumstances, the

preparation of a Federalism Assessment

is not warranted.

Notice and Comment

The agencies find that prior notice

and opportunity for comment are

unnecessary under 5 U.S.C. 553(b)(3)(B)

because the agencies are not exercising

discretion in a way that could be

meaningfully affected by public

comment. Instead, this rescission of the

agencies’ speed limit compliance

regulations is mandated by Section

205(d) of the NHS Act. Therefore, notice

and opportunity for comment are not

required under the regulatory policies

and procedures of the Department of

Transportation.

In addition, good cause exists to

dispense with the 30-day delayed

effective date requirement of 5 U.S.C.

553(d) because this final rule ‘‘grants or

recognizes an exemption or relieves a

restriction’’ in accordance with 5 U.S.C.

553(d)(1). In repealing the NMSL

regulation for all States, all Federal

speed limit provisions are terminated.

Consequently, the agencies are

proceeding directly to a final rule which

is effective upon its date of publication.

List of Subjects in 23 CFR Part 1260

Grant programs—transportation,

Highway and roads, Motor vehicles,

Traffic regulations.

In consideration of the foregoing, Part

1260 of Title 23, Code of Federal

Regulations, is removed.

Issued on: January 12, 1998.

Kenneth R. Wykle,

Administrator, Federal Highway

Administration.

Ricardo Martinez,

Administrator, National Highway Traffic

Safety Administration.

[FR Doc. 98–1888 Filed 1–26–98; 8:45 am]

BILLING CODE 4910–59–P

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[TD 8759]

RIN 1545–AP36

Filing Requirements for Returns

Claiming the Foreign Tax Credit

AGENCY: Internal Revenue Service (IRS),

Treasury.

ACTION: Final Regulation.

SUMMARY: This document contains a

final regulation relating to the

substantiation requirements for

taxpayers claiming foreign tax credits.

The regulation is necessary to provide

guidance to U.S. taxpayers who claim

foreign tax credits.

DATES: Effective date: This regulation is

effective January 27, 1998.

Applicability date: These regulations

are applicable for tax returns whose

original due date falls on or after

January 1, 1988.

FOR FURTHER INFORMATION CONTACT: Joan

Thomsen, (202) 622–3850 (not a toll-free

call).

SUPPLEMENTARY INFORMATION:

Background

On January 13, 1997, the IRS

published in the Federal Register a

notice of proposed rulemaking (REG–

208288–90), 62 FR 1700, relating to the

filing requirements for returns claiming

the foreign tax credit (the ‘‘proposed

regulation’’).

Written comments responding to the

proposed regulation were received. A

public hearing was requested and

scheduled but was later canceled when

the one requester withdrew the request

to testify. After consideration of all of

the written comments, the proposed

regulation under section 905(b) is

adopted as revised by this Treasury

Decision.

Summary of Comments and Final

Regulations

The commenters argued that the

‘‘interim credit’’ notion incorporated in

the proposed regulations from

Continental Illinois, T.C. Memo 1991–

66, 61 T.C.M. (CCH) 1916 (1991), aff’d

in part and rev’d in part, 998 F.2d 513,

516–17 (7th Cir. 1993), was misapplied

and that the proposed amendment to

§ 1.905–2(b)(3) denied district directors

the flexibility to find compliance with

section 905(b) unless the taxpayer

produces receipts (or other direct

evidence of payment) in order to prove

that the taxes actually were paid to the

foreign government. They argued that,

even if the district director should be

able to require such proof in cases such

as Continental Illinois, district directors

must have the flexibility to accept lesser

proof. They argued that a portfolio

holder of publicly-traded foreign

securities, for example, will not be able

to obtain proof in the form of receipts

evidencing that the issuer of the

securities actually paid the withheld

taxes to the foreign government.

The comment letters are correct that

the regulations historically have

allowed the district director flexibility

to determine that section 905(b) is

satisfied without the production of tax

receipts evidencing that the tax has been

paid to the foreign government.

Treasury and the IRS did not intend that

the amendment to § 1.905–2(b)(3), as

proposed, deny the district director the

flexibility to accept secondary evidence

of the foreign tax payment where it has

been established to the satisfaction of

the district director that it is impossible

to furnish a receipt for such foreign tax

payment. The amendment was merely

intended to clarify that proof of the act

of withholding through secondary

evidence is not, per se, equivalent to

proof of payment of the foreign tax.

Treasury and the IRS have now

concluded, however, that such

clarification is not necessary.

Continental Illinois v. Commissioner,

supra.

Therefore, in response to comments,

the proposed regulation is finalized

without its proposed amendment to

§ 1.905–2(b)(3). Thus, the final

regulations are identical to the final

regulations currently in effect, except

§ 1.905–2(a)(2) no longer requires a

foreign receipt or return to be attached

to a Form 1116 or Form 1118.

Treasury and the IRS will continue to

review the foreign tax credit

substantiation rules to assure that they

are functioning adequately. For
Federal Register / Vol. 63, No. 17 /Tuesday, January 27, 1998 /Rules and Regulations 3813

example, Treasury and the IRS are

concerned that U.S. holders of foreign

securities, including American

Depositary Receipts (‘‘ADRs’’), may be

claiming foreign tax credits in situations

where an intermediary in the chain of

ownership between the holder of a

foreign security or an ADR and the

issuer of the security (or the security

underlying the ADR) has taken actions

inconsistent with the ownership of the

underlying security by the person

claiming the credit, such as a

disposition of such security. One

approach to address this issue would

involve modifying the substantiation,

documentation and reporting rules with

respect to payments on such securities

and taxes withheld therefrom. For

example, in order for a U.S. owner to be

entitled to a credit for foreign taxes

imposed on income with respect to a

security, financial intermediaries

(including custodians) could be

required to substantiate that they have

not taken any action inconsistent with

beneficial ownership of the relevant

security by such U.S. owner.

It should be noted that portfolio

investors are not necessarily entitled to

foreign tax credits for the full amount

indicated on the Form 1099 as foreign

taxes paid. Portfolio investors are only

entitled to a foreign tax credit for the

amount of tax that is legally owed,

which may not be the same as the

amount withheld. If, for example, a

portfolio investor is entitled to a refund

of foreign tax withheld because of a

reduced treaty withholding rate, the

investor is only entitled to a foreign tax

credit for the reduced amount, whether

or not the investor files a refund claim

with the foreign tax authorities. The IRS

has made changes to the Form 1116

Instructions and Publication 514 to

clarify this point and intends to make

similar changes to the Form 1118

Instructions.

Explanation of Provisions

Section 1.905–2(a)(1), 1.905–2(b)(1), (2),

and (3), and 1.905–2(c)

Sections 1.905–2(a)(1), 1.905–2(b)(1),

(2) and (3), and 1.905–2(c) are

unchanged from the current final

regulations.

Section 1.905–2(a)(2)

Under former § 1.905–2(a)(2),

taxpayers generally were required to

attach to their income tax returns either

(1) the receipt for the foreign tax

payment or (2) a foreign tax return for

accrued foreign taxes. Section 1.905–

2(a)(2) removes the requirement that the

documentation be attached to the

income tax return. The regulation now

provides that such evidence of payment

of foreign taxes must be presented to the

district director upon request.

Special Analyses

It has been determined that this

Treasury decision is not a significant

regulatory action as defined in

Executive Order 12866. Therefore, a

regulatory assessment is not required. It

has also been determined that section

553(b) of the Administrative Procedures

Act (5 U.S.C. chapter 5) does not apply

to this regulation, and because the

regulation does not impose a collection

of information on small entities, the

Regulatory Flexibility Act (5 U.S.C.

chapter 6) does not apply. Pursuant to

section 7805(f) of the Internal Revenue

Code, the notice of proposed rulemaking

preceding this regulation was submitted

to the Chief Counsel for Advocacy of the

Small Business Administration for

comment on its impact on small

business.

Drafting Information: The principal

author of this regulation is Joan

Thomsen of the Office of the Associate

Chief Counsel (International), IRS.

However, other personnel from the IRS

and Treasury Department participated

in their development.

List of Subjects in 26 CFR Part 1

Income taxes, Reporting and

recordkeeping requirements.

Adoption of Amendments to the

Regulations

Accordingly, 26 CFR part 1 is

amended as follows:

PART 1—INCOME TAXES

Paragraph 1. The authority citation

for 26 CFR part 1 continues to read in

part as follows:

Authority: 26 U.S.C. 7805 * * *

Par. 2. Section 1.905–2 is amended by

revising the second through fourth

sentences in paragraph (a)(2) to read as

follows:

§ 1.905–2 Conditions of allowance of

credit.

(a) * * *

(2) * * * Except where it is established

to the satisfaction of the district director

that it is impossible for the taxpayer to

furnish such evidence, the taxpayer

must provide upon request the receipt

for each such tax payment if credit is

sought for taxes already paid or the

return on which each such accrued tax

was based if credit is sought for taxes

accrued. The receipt or return must be

either the original, a duplicate original,

or a duly certified or authenticated

copy. The preceding two sentences are

applicable for returns whose original

due date falls on or after January 1,

1988. * * *

* * * * *

Michael P. Dolan,

Deputy Commissioner of Internal Revenue.

Approved: January 13, 1998.

Donald C. Lubick,

Acting Assistant Secretary of the Treasury.

[FR Doc. 98–1816 Filed 1–26–98; 8:45 am]

BILLING CODE 4830–01–U

DEPARTMENT OF LABOR

Occupational Safety and Health

Administration

29 CFR Part 1926

[Docket No. S–205]

RIN 1218–AA40

Safety Standards for Scaffolds Used in

the Construction Industry (Aerial Lifts);

Effective Date and Office of

Management and Budget Control

Numbers Under Paperwork Reduction

Act

AGENCY: Occupational Safety and Health

Administration, Labor.

ACTION: Final rule; amendment;

announcement of effective date and

OMB approval of information collection

requirements.

SUMMARY: This document announces the

effective date of a provision in the

Occupational Safety and Health

Administration’s construction standard

for scaffolds that addresses

manufacturer certification of ‘‘field

modified’’ aerial lifts. The document

also adds an entry to display that the

collection of information has been

approved by the Office of Management

and Budget under the Paperwork

Reduction Act of 1995.

EFFECTIVE DATE: The amendment in this

final rule and § 1926.453(a)(2),

published at 61 FR 46026, are effective

January 27, 1998.

FOR FURTHER INFORMATION CONTACT:

Laurence Davey, Directorate of

Construction, Occupational Safety and

Health Administration, U.S. Department

of Labor, Room N–3621, 200

Constitution Avenue, NW., Washington,

DC 20210, telephone (202) 219–7198.

SUPPLEMENTARY INFORMATION: In the

August 30, 1996, Federal Register at 61

FR 46026, et seq., OSHA revised the

standards for scaffolds in construction,

codified as subpart L of 29 CFR part

1926. The effective date for the revised

subpart was November 29, 1996.

However, in that same document, at 61